Sprint's Nextel nightmare lingers
Sprint continues to be haunted by its $35 billion acquisition of Nextel Communications in 2005 as the company is forced to divest some of its Nextel network and is still struggling to get its finances back on track.
On Wednesday, the Supreme Court of Illinois upheld a lower court's ruling that Sprint must stop owning, operating, and managing its Nextel iDEN network in Sprint affiliate iPCS's territory. But the court also extended the time line Sprint has for divesting itself from this market from 180 days to 360 days.
Basically, the two courts agreed with iPCS that Sprint was violating its agreement with iPCS by operating the Nextel network in the iPCS territory. Nextel had already been operating in iPCS's territory before Sprint bought the company in 2005. The agreement between Sprint and iPCS precludes Sprint from operating a competing wireless service in its territory. So once the merger was complete, Sprint was in violation of its agreement, iPCS argued.
Now Sprint must either work out a deal with iPCS or with some other wireless operator in order to continue serving its roughly 500,000 iDEN customers in the iPCS territory.
Sprint spokesman Matt Sullivan said the ruling was expected and his company is working to ensure that service won't be interrupted.
"Our current customers don't need to take any action," he said. "We remain committed to providing them service. We have been considering these issues for a long time, and we will be providing more details to customers later."
Sprint's merger with Nextel has been blamed for many of the problems facing the wireless operator today. The company has been steadily losing customers for several quarters, including a net loss of about 1.3 million customers in the third quarter of 2008. Sprint also posted a quarterly loss of $326 million, or 11 cents a share. A year earlier the company had a profit of $64 million, or two cents a share. Revenue also fell about 12 percent to $8.82 billion from $10.04 billion a year earlier.
For the past year, Sprint has been trying to regain its footing. The company hired a new CEO and has begun an aggressive campaign to improve its customer service. But the Nextel merger and the troubles associated with it still linger. Earlier this year Sprint tried to sell the Nextel business, but the weak economy has made that prospect next to impossible.
Now as the economy worsens, Sprint executives have said they expect a few speed bumps on their road to recovery. Specifically, they expect to see an increase in defaults in service plans and continued declines in subscribers, who sign long-term contracts, as well as declining revenue on a per user basis.
In an effort to get its finances back on track, Sprint has been cutting costs. For example, the company saved about $15.5 million during the most recent quarter by freezing office supply purchases. It's also slashed spending on travel, reducing on a monthly basis the number of employees traveling by about 63 percent. This effort has saved the company about $7.5 million in airfare alone from January to September, spokesman James Fisher said.
In its latest attempt to cut costs, Sprint began on Thursday offering some employees a volunteer severance package. The buyout only applies to employees who have non-customer facing jobs. Eligible employees can apply for the severance starting today and have until December 3 to put in their request. At that point, Sprint will review applications and let employees know if they're request has been accepted. The severance package being offered includes eight weeks of full pay, plus an additional two-weeks of pay for every year an employee has worked for the company.
Fisher said the company doesn't have a specific goal in terms of how much money it expects to save with the buyout or even how many employees it hopes will take the package. He also emphasized that the program is just one of many things the company is doing to reduce costs.
"We have been cutting back in various ways for the better part of this year," he said. "So this is just part of our ongoing attempts to save as much as we can without impacting the service we provide to customers."
Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie.
Its really not the merger, its the types of customers they attract, people with horrible credit. These people go over, don't pay, and either want it all taken away for free or leave.
I am one of the most well-known wireless leaders in Northern California providing wireless solutions for corporate accounts. The difference between my company and everyone else is my exceptional vision and leadership especially on the B2B side. Without sacrificing quality, integrity, and customer service, my abilities have gained me the knowledge and expertise to win numerous awards including top seller award for Northern California from a variety of wireless carriers. Having said that, I was approached by Nextel in 2002 to become one of their B2B Authorized Representatives as a result of my success from previous years. With my exceeding success through the B2B channel, Nextel approached me to do a joint venture on launching new retail locations in the Northern California market since there was no strong retail presence. With knowledge, experience, and expertise I put together one of the most dynamic teams of highly motivated and well qualified communication consultants. In 2003, my ex-colleague and dear friend was invited to join in this new vision. I launched eight locations in Northern California and I was invited to launch new locations in Arizona, Colorado, and Minnesota. In 2005, when the merger with Sprint occurred, the new management team: Mark Sadighian, Paul Harris, and Dennis McSweeney no longer shared the vision that Nextel had with my company. At the same time I found out that my partner was embezzling money and started a new wireless company with another carrier. When I approached Mark Sadighian with my new found news, the advise that I received was to separate our partnership and for me to start a new company under a new name. I was granted an exclusive dealer contract with Sprint/Nextel and their service center. Two months into my new company, I submitted six new retail locations that were denied to me for expansion, but at the same time were handed to someone else. Sprint/Nextel set me up for failure, after I invested hundred of thousands of dollars into the new company. Sprint/Nextel decided at that point not to support me in my visions, ideas, and ventures. As a result, I am seeking other dealers that have had a similar experience as me for a class action lawsuit. Before I posted my story online, I requested the immediate assistance from the CEO of Sprint, Daniel Hesse. He never responded to any of my emails, and at this point left me with no choice, but to put together a class action lawsuit for Authorized Dealers. I will not stop until my losses are compensated. If you are interested in contacting me with any questions, concerns, or to assist me in participating in this class action lawsuit please email me at: sprintactionlawsuit@gmail.com or visit www.nextel.bz
http://www.mywirelessnetwork.mywirelessrep.com/opportunity.html
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by tawasha
December 2, 2008 9:19 AM PST
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